Cinea made headlines late last year after winning a federal grant to help develop ways to block camcorder-toting movie pirates from recording film premieres and distributing them on the Internet. But they also offer more traditional encryption techniques to film studios that ultimately want to distribute films digitally to theaters instead of using film.

The company's camcorder-fighting technology is still under development. Its plan is to introduce distortions in the video that are captured by cameras, but are invisible to the human eye--a little like computer screens that display lines or bars when captured on video.

Dolby's entry into the content-protection market will bring it in competition with Microsoft, which is pushing hard to make its Windows Media and associated digital rights management technology standards in the nascent digital cinema business, as well as online. But Dolby says studios want to see more companies than Microsoft in the content protection business.

"The film industry has been very vociferous about the fact that they want content protection technology developed," Dolby Vice President Tim Partridge said. "But studios want multiple people providing it."

The digital cinema drive is providing a set of worries for studios already concerned about DVD copying and Internet file-swapping--as well as potential opportunities for new generations of technology companies like Cinea.

Hollywood studios want a fast move to all-digital distribution, which would relieve them of the burden of printing expensive film copies of every movie for distribution to theaters. But standards have been slow to emerge, and theaters themselves, which will have to bear the costs of installing new digital projectors, have not been quick to make the transition on their own.

Cinea's first technology would put digital locks on the files distributed to theaters, providing unique keys to unlock access to the content so that only intended recipients could unscramble them. The technology might also include usage rules based on contracts with studios, limiting theaters to showing the films for a certain number of screenings, or for a limited range of dates.

Cinea will operate independently as a Dolby subsidiary, remaining largely separate from its new parent company's business, Partridge said.

Discuss: Dolby buys into piracy-fighting tech

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